Linley Valley ponders contracts
Dominant pig meat wholesaler Linley Valley Pork is reassessing whether it will contract as many pigs from farmers in the future, against a backdrop of industry turmoil.
Parent company Craig Mostyn Group is reviewing its contract arrangements as an oversupply of pork is compounded by high grain prices. Group chief executive Patrick Walsh said about 60 per cent of the WA pigs sold to Linley Valley, including those produced by CMG’s own farms, were under a contract arrangement, a far higher figure than in other States, where the proportion of pigs sold under contracts was about 15 per cent.
The high number of contracts in WA came about five years ago when Linley Valley had difficulty securing a consistent and regular supply of pigs.
Mr Walsh said Craig Mostyn had since built up its own piggery farms, helping ensure a consistent supply. He said internal discussions were in progress on whether it would be better instead to pay market prices to farmers for their pigs, though no decision had been made.
The WA Pork Producers Association said it cost about $2.70$3.30/kg to produce a pig to finishing weight, but the market rate from buyers was about $2.50 — equivalent to a loss of up to $56 a pig. The crisis has forced some small producers out of business and it was last week revealed the State’s third-biggest piggery GD Pork had gone into voluntary administration.